PROCEEDINGS

International Conference on Economic

and Information System Management

October 17 18, 2014

STMIK/STIE MDP Building
Jl. Rajawali No.14 Palembang, Indonesia

STIE Multi Data Palembang

Proceedings of
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and Information System Management

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Proceedings of ICE-ISM 2014

Palembang, October 17 18, 2014

Information Economics Cost-Benefit Analysis

on Automatic Billing System Implementation
at Ogan Central Electronic
Trisnadi Wijaya#1, Rika Kharlina Ekawati#2
#1

Management Department, STIE MDP

Jl. Rajawali No. 14 Palembang, Indonesia
#2
Accounting Department, STIE MDP
Jl. Rajawali No. 14 Palembang, Indonesia
1trisnadi@stie-mdp.ac.id
2rika@stie-mdp.ac.id

Abstract Information technology plays an important role for

the ease and smoothness of the system in the company. More and
more companies use information technology in their activities.
The purpose of this research is to analyze the feasibility of
automatic billing system implementation in the Ogan Central
Electronic use the cost-benefit analysis method of Information
Economics. The results of the identification and analysis of
Tangible and Quasi Tangible benefits of the application
Automatic Billing System financially Enhanced ROI values
obtained by 58.0207% so it can be concluded that the benefits of
this application is large enough for the Ogan Central Electronic.
Keywords cost benefit analysis, information economics,
automatic billing system

I. INTRODUCTION
Information Economics is a method for measuring a
difficult project mentioned in the nominal money so it can be
calculated costs and benefits in the application or in the future
development of the project. The project is intended to be a
technology implementation in the company. As known that
intangible benefits of technology are difficult to define and
measure its magnitude. As an example of the network
technologies continue to be needed for the business. Prior to
the use of such technology is applied, it must first calculate
the economic value that financial planning can be calculated
accurately and does not cause any harm.
Application of the technology in the company is an
investment for the future viability of the company to face the
changing times. This investment cost is not small and often
very large losses due to errors in the calculation of the initial
implementation process. To that end, information economics
is needed so that all costs to be incurred are not wasted.
Because this method will help the accurate calculation applied
technology.
Automatic billing system is one example of the application
of the technology used by the company. Previously, there will

be a calculation of the costs and benefits of what is perceived

by the company management before and after implementation
is applied. Therefore, in this study using a case study on the
implementation of the Electronic Central Ogan automatic
billing system in order to analyze the cost benefit that is
perceived by management using Information Economics.
II. LITERATURE REVIEW
The theory used in this research include theories
concerning the conduct of research and its foundation in the
previous research.
A. Information Technology Investments
The development of information technology has forced
companies to invest which does little to progress the company.
According Ranti (2006) in the Bhisma and Rahayu (2010)
there are four types of benefits of IT investments called
Benefit Matrix IT, are: (1) Easy-to-Quantify Tangible (EQT)
or Hard Benefit, the benefits of IT that directly affect the
profitability of the company and the effect can be measured
directly and objectively. Examples of benefits: reduced costs
and increased revenues. (2) Hard-to-Quantify Tangible (HQT),
the benefits of IT that directly affect the profitability of the
company, but the exact effect can not be measured directly.
Examples of benefits: better information and increased
security company. (3) Easy-to-Quantify Intangible (EQI), the
benefits of IT can be measured but the effect does not affect
directly and need for profitability. Examples of benefits:
increased customer satisfaction and increased staff satisfaction.
(4) Hard-to-Quantify Intangible (HQI) or Strategic / Soft
Benefits, the benefits of IT that the effect does not affect
directly and need for profitability.
In the application of information technology investments,
many architectures to be built. According to Gartner (2002)
quoted from Indrajit (2004) there are three concepts of
thinking for information technology investment management
strategies, are:

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1.

2.

3.

Companies that can integrate with the corporate business

plan development strategy of information technology
(strategic planning) will have a much better performance
than companies that fail to make such integration;
Companies that have clear information technology
architecture
(enterprise
information
technology
architecture) will be able to improve the operational
performance of 30% better compared to other companies
that do not have it - especially with regard to the
demands of the external environment changes due
dimanis from time to time; and
Companies that apply the principles of project portfolio
management in a variety of information technology
managed to save 10-30% of the expenditures of each
project is done (mostly due to a reduction in the activity
of resource allocation redundancies).

3. Value Restructuring
A direct or indirect benefits enjoyed by the company due
to the restructuring of a number of business processes.
4. Innovation
What is meant in this framework is the ability of
information technology to help give birth to the products
and new services that can be offered to the market.

B. Information Economics
Information Economics (IE) is a method developed by
Parker et al. to assess the feasibility of implementation
projects of information technology. The things to be taken into
account, among others, to analyze the perceived costs and
benefits when deciding to use technology in the enterprise.
According Tjahjono (2002) in Tjahjono (2007),
Information Economics, is a methodology to quantify the cost
(the cost) and value (value) to justify information technology
projects. Of all the existing methods, Information Economics
is considered as one of the most comprehensive manner and
assessed can answer a number of factors and unique
characteristics, and the issues and challenges faced. Indrajit
(2004), in his book also said that Marilyn M. Parker, Robert J.
Benson, and H.E. Trainor is one of the information technology
practitioners who do break through the theory of "information
economics" as one of the ways that until recently was rated
"most accurate" in relation to the process of analyzing the
costs and benefits of information technology implementation.
IE method using two approaches in the analysis of the
benefits of IT. The first approach is applied to the financial
benefits that are tangible and quasi. The second approach was
applied to non-financial benefits that are quasi. The technique
used to analyze the tangible benefits is the Traditional CostBenefit Analysis in the form of a simple ROI (Bhishma and
Rahayu, 2010). Parker (1998) in Indrajit (2004) mentions the
concept of value in information economics which consists of:
1. Value Linking
Value Linking is the benefit obtained by increasing the
performance of one or a number of business functions or
organization because of the implementation of information
technology.
2. Value Acceleration
Value Acceleration evolved as a logical consequence of
the nature or characteristics of the technology that has the
dimension of "speed" or speed up the creation of a benefit
for organizations such as companies.

Source: Parket et.al., (1987) in Indrajit (2004)

Fig. 1 Value Consept

Information economics methodology classified the

benefits of IS / IT into three parts (Parker, 1998) quoted from
Yulia (2006), namely:
1. Tangible benefit
The real benefit or a direct impact on corporate profits. For
example, increase productivity, reduce the use of
paper, and so on. Analysis of the tangible benefits or uses
quantitative calculations using simple ROI- Traditional
Cost-Benefit Analysis (TCBA)
2. Quasi benefit
The benefits are in the "gray", or a direct effect on profits,
but difficult to be calculated or otherwise, does not impact
directly on profitability but can be calculated. For example,
to improve the planning process, improving decision
making, and so on.
3. Intangible benefit
Or intangible benefits that can be seen to have a positive
impact for the company, but does not directly affect profits.
For example, enhance the corporate image, increase
employee morale, and so on. Analysis of the intangible
benefits of using two assessment are:
a. Business Domain
Assessment components of the business domain, among
others:
Strategic match: the benefits of information
technology is measured by how much the support of the
achievement of the strategic objectives of the
organization or the contribution to the operations
activities to achieve these goals.
Competitive advantage: the benefits of information
technology is measured by its contribution to the

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achievement of organizational competitive advantage.

The use of information technology is the potential to
create obstacles competition. Thus, technology projects
that support inter-organizational systems (interorganizational systems) have higher benefits.
Management information support: This category
assesses the contribution of information technology
projects to the need for information management in
decision making.
Competitive response: the benefits of information
technology projects is measured by how much the risk of
competition if the project is delayed or not implemented.
The more the project can not be delayed, the higher the
benefits.
b. Technology Domain

The components of the assessment domains include:

Strategic IS architecture: project benefits the IS / IT is
measured through the level of conformity of the project
to the planning of the IS / IT as a whole.
Defitional Uncertainty: project benefits / IT measured
by how much uncertainty due to the change of the target
Technical Uncertainty: project benefits / IT measured
by how much dependence on the expertise of the project,
the hardware, software and systems.
Infrastructure Risk: project benefits the IS / IT
investment is measured by how important nonproject to
accommodate this project.

Source : Ranti (2005) quoted from Yulia (2006)

Fig 2. Information Economics Framework

Figure 2 above explains that, information economics refers to

a form of assessment scores show the figures for the economic
value of an investment in IS / IT are done. The formula set by
Parker (1998) are as follows (Bhisma and Rahayu, 2010):
Formula 1. Project Score
Project Score = Enhanched ROI + Weight of business areas
+ weighting field of technology

2.

3.
Formula 2. Enhanced ROI
Enhanced ROI = Traditional ROI + value linking + value
acceleration + value restructuring + innovation valuation
C. Business Value of Information Technology
Based on the information technology implemented in the
company, has some business value. Ranti (2008) says that
there are 13 categories of Business Value consisting of:
1. Reducing
Cost
of
(travelling
cost,
staff/operator/employee cost, meeting cost, service

4.

5.

failure cost, application development cost, delivery cost,

training cost per employee, returning cost for incorrect
delivery, cost of money, office supplies and printing
cost, subscription cost of certain reading materials or
subscription cost per employee, space rental cost, device
rental cost, inventory cost, research failure cost).
Increasing Productivity caused by (restructuring job
function, accelerating mastering product knowledge,
ease of analysis, increasing employee satisfaction).
Accelerating Process of (production process, stock
procurement process, report making process, data
preparation process, order checking process, debt
payment process, transaction process, decision making
process).
Reducing Risk of (price miscalculation, unrecoverable
claim, inventory lost, rejected goods, data lost, incorrect
data, penalty, losing potential employee, forgery,
administration fraud, incorrect payment, asset
mismanagement).
Increasing Revenue caused by (increasing business
capacity, increasing report quality, increasing customer

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6.
7.
8.

9.

10.
11.

12.

13.

trust, widening market segment, increasing other

incomes).
Increasing Accuracy of (billing, analysis, data,
planning, decision).
Accelerating Cash-in caused by (accelerating billing
dispatching).
Increasing External Services of (reducing order
cancellation, knowing customers problems, adding point
of services, personalized services, customer satisfaction).
Increasing Image caused by (increasing service quality,
offering substantial discounts, complying with
regulations, using branded systems).
Increasing Quality of (better supplier/vendor
management, work result, services, products).
Increasing Internal Services of (shared services,
matching employees right and responsibility, employee
services, proper schedule and training material).
Increasing Competitive Advantage caused by
(forming business alliances, accelerating the execution of
new business opportunities, increasing switching cost).
Avoiding Cost (ACO) of (reserved fund, maintenance
cost, lost and delay cost).

Late payment of accounts receivable made by the customer

will have an impact on the working capital turnover Ogan
Central Electronic. Enterprises should also be willing to lose
the opportunity to benefit from the accelerated payment of
accounts receivable, other than fines received. Thus, the delay
in the payment of customer accounts receivable will not be
profitable for a company may cause the company even failed
to gain a greater loss.
The books of accounts receivable company also is still done
with the concept of accounting without following the rules of
general accounting. Company only records the amount of
receivables the company, due date, the amount of installments
per month and the number of bills that have been paid. The
company does not know the amount of net profit earned per
month from the sales made on credit or cash. Companies only
know the size of the amount of turnover or gross profit earned
each month. Recording the amount of losses resulting from
credit sales is not available.

B. Features and Benefits Automatic Billing System

Automatic Billing System can provide several benefits that
can be described as follows:
Bookkeeping neat receivables in accordance with standard
III. PROBLEM ANALYSIS
accounting rules
It has a reminder feature payment due receivables that can
A. Problems in Ogan Central Electronic
be sent via SMS or email to the customer
Ogan Central Electronic is one of the growing trading

Able to recapitalize receivables customers who have paid

company which sells electronic goods either by cash or credit.
and unpaid
Ogan Central Electronic focus on the sales region of Indralaya.
The company currently has regular customers amounted to Prepare various reports related to the accounts receivable
customers
1,427 people, and about 65 percent of its customers buy goods
Calculated total payments receivable customer acceptance.
on credit.
Automatic Billing System program will be made in the
The credit sales of electronic goods will have an impact on
the increasing number of corporate accounts receivables. The Visual Basic 6.0 programming language with SQL Server
increase in accounts receivable on the one hand resulted in 2000 database. Visual Basic 6.0 programming language until
increased interest income from loans. However, the company now still a popular programming language that is often used to
also must face the risk of bad debts and the rising costs support an interface that is easy and simple programming
language.
associated with the management of these receivables.
The problems that are often faced by the company is
currently associated with these receivables is a problem that is
IV. EVALUATION AND ANALYSIS OF BENEFITS
often done late payment by customers. Companies must
AUTOMATIC BILLING SYSTEM
always remind regular customers one week before the due
date of payment via the phone for about five minutes. The
The results of the evaluation Tangible and Quasi Tangible
company is also working on some debt collectors for accounts
benefits
for Automatic Billing System can be seen in Table 1
receivable payments mengihkan customers. Administrative
and
Table
2.
personnel who handle specific accounts given high salary
considering the importance of bookkeeping accountsreceivable customers.
Another problem that is not less important is doubtful
accounts. Based on the experience of the owner of the
company about 20 percent of customers who make purchases
on credit bad credit status even become bad debts. A customer
will be given a bad credit status if ever installment arrears
exceed 60 days twice in the same period.

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Palembang, October 17 18, 2014
TABLE 1
TANGIBLE BENEFITS

Benefits
Reduce Telecommunications
Costs
Reduce Costs Document
Delivery
Reducing the Cost of Printing
Documents
Reducing Number of
Employees
Total

Value
Rp 5.417.000

Rp 370.000

58,0207%

The result of Enhanced ROI from Tangible benefits, Value

Linking benefits, the benefits of Acceleration Value and
Value Restructuring is equal to 58.0207%.

Rp 5.200.000
Rp 11.579.000

QUASI TANGIBLE BENEFITS

Value
Rp 6.353.000
Rp 4.698.000
Rp 2.434.000

Economic Impact Worksheet generated by Tangible and

Quasi Tangible benefits can be seen in Table 3.
TABEL 3
ECONOMIC IMPACT WORKSHEET

Benefits
Value Investing
Tangible
Value Linking
Value
Acceleration
Value
Restructuring
Simple ROI
Tangible Benefits
Simple ROI Value

57,0079%

Rp 592.000

TABLE 2

Benefits
Value Linking
Value Acceleration
Value Restructuring

Linking Benefits
Simple ROI Value
Acceleration
Benefits
Simple ROI Value
Restructuring
Benefits

Year 1
73.000.000
12.447.425
12.829.475

Year 2
13.380.982
13.513.686

Year 3
14.384.556
14.692.312

13.150.300

13.629.126

14.836.311

13.416.550

13.812.791

15.125.751

55,0863%
56,2130%

V. CONCLUSIONS
Based on the identification and analysis of Tangible and
Quasi Tangible benefits from the application of Automatic
Billing System financially Enhanced ROI values obtained by
58.0207% so it can be concluded that the benefits of this
application is large enough for the Ogan Central Electronic.
The implementation of Automatic Billing System will provide
many benefits for Ogan Central Electronic both Tangible and
Quasi Tangible benefits.
REFERENCES
[1] Bhisma, Ajeng Vrika Nerissa and Flourensia Sapty Rahayu, Analisa
Manfaat Implementasi Electronic Customs Clearance System (ECCS) di
Chevron Indonesia Company Balikpapan dengan Metode Information
Economic, Jurnal Buana Informatika, Vol. 1 No. 2, Juli 2010: 119-128.
[2] Indrajit, Richardus Eko, Kajian Strategis Analisa Cost-Benefit Investasi
Teknologi Informasi, Penerbit Andi: Yogyakarta, 2004.
[3] Ranti, Benny, The Generic IS/IT Business Value Category: Cases in
Indonesia, e-Indonesia Initiative 2008 (eII2008), Konferensi dan Temu
Nasional Teknologi Informasi dan Komunikasi untuk Indonesia, Jakarta,
2008.
[4] Tjahjono, Budi, Analisis Cost Benefit Dengan Metode Information
Economics Dalam Pengembangan Teknologi Jaringan Pada PT. Indo
Super Kencana, Jurnal FASILKOM Vol. 5 No.2 Oktober 2007.
[5] Yulia, Kajian Kelayakan Investasi Proyek Teknologi Informasi Dengan
Menggunakan Metode Information Economics, Jurusan Teknik
Informatika, Fakultas Teknologi Industri Universitas Kristen Petra,
http://puslit.petra.ac.id/journals/informatics, 2006.

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Jl. Rajawali No. 14
Palembang, Indonesia
http://www.stie-mdp.ac.id

ISBN: 978-602-71513-0-7